Fears of an industry-wide crackdown, Covid-19 outbreaks, and China’s stance on Russia’s invasion of Ukraine all contributed to a further drop in the price of Chinese technology and electric vehicle (EV) stocks.
Speaking with CNBC, the CEO of the financial services firm TD Ameritrade Christopher Brankin, discussed China’s “substantially beat up” stocks and outlined that investors are now taking a ‘wait-and-see’ approach with such firms.
Investors are keeping an eye on Chinese stocks companies due to mounting coronavirus cases, regulatory obstacles, and macroeconomic and geopolitical risks.
“We have this chatter around the SEC in terms of delisting different stocks but these aren’t all these stocks that are being listed. You have everything from big tech names like Baidu and Alibaba. Some of the big EV names with heavy investments from the US whether that’s NIO, BYB or XPeng.”
The CEO added:
“All these things have been substantially beaten up. I mean some of the EVs are down 50% in the last 30 days. Some of the big tech names have just been getting crushed you know across the board.”
Shanghai Composite and Hang Seng both down
The CEO pointed out that people do not want to take on further risk at this time, highlighting the Shanghai Composite Index, which is down over 11% only in the past month, and the Hang Seng Index, which is down around 18% in the last month.
“People are kind of wait and see at this point, but I think we’re getting to that point where some of these valuations if you believe that the stocks listed in the U.S you know equity market aren’t going to get de-listed which I don’t think a lot of them are going to. There could be some type of valuation play here.”
Indeed, Finbold recently highlighted that the Hang Seng Tech Index plunged is now down almost 70% from its all-time high.
One further thing to note is the fact that the Hang Seng is down significantly more than its March 2020 crash, when most international equities fell under the weight of Covid-19 concern.
In the face of unknown regulatory headwinds in China, as well as the potential of delisting from major U.S. stock exchanges, among other considerations, tech heavyweights such as Alibaba have seen their stock prices plummet by as much as 70% since their zenith.
JPMorgan Chase downgraded a total of 28 Chinese equities, including Alibaba (NYSE: BABA) and Tencent Holdings, and “called them ‘uninvestable’ over the next six to 12 months.”
Watch the video: Chinese tech and EV stocks “substantially beat up”
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